UiPath Q3 FY26 Earnings Postmortem: Clean Beat, Call-Heavy Squeeze

PATHReport Date: 2025-12-03After Market Close

Read original prediction

Results

Model:✔ Correct

Outcome (Actual/Expected)

Beat / Beat

Guidance (Actual/Expected)

Strong / Inline

Predicted Move

up +8.0%

Confidence

60%

Earnings Gap

+8.0%

Session Return

+24.2%

Final crowd results:

No votes recorded

Postmortem

UiPath Q3 FY26 Earnings Postmortem: Clean Beat, Call-Heavy Squeeze

1) TL;DR

UiPath’s fiscal Q3 2026 print came in clearly ahead of expectations on both revenue and earnings, with revenue just over $411 million and non-GAAP EPS at $0.16 versus a mid-teens consensus. Guidance for the following quarter landed slightly above what the Street had penciled in and was framed in a confident AI/automation narrative rather than a cautious reset.

The stock closed around $14.88 on the report day, opened near $16.07 at the next regular-session open, and finished that first session near $18.48. That translates into an earnings-gap move of about +8% and a first-session gain of roughly +24% off the pre-earnings close.

The original call was for a beat, an upward move, and an expected gap of roughly 8% from the mid-teens, with medium (~60%) directional confidence. Directionally, that’s spot on for the opening gap. Where reality overshot the base case was in the full-session squeeze, which pushed the move beyond the mid-teens range contemplated in the bull scenario.

2) What the company actually reported

For the quarter ended October 31, 2025, UiPath delivered:

Revenue: about $411.1 million, up roughly 16% year on year and ~4–5% above consensus.
Non-GAAP EPS: $0.16, a mid-teens cent print that beat estimates by a comfortable margin.
ARR: around $1.78 billion, growing low double digits year on year with positive net new ARR.
Profitability: GAAP operating income positive, with non-GAAP operating income in the high-$80 million range and mid-20s operating margins.

Guidance for the subsequent quarter called for revenue in the $462–467 million range, with the midpoint slightly ahead of typical Street models and healthy non-GAAP operating income. The tone on the call leaned into agentic automation, AI-driven workflows, and a durable pipeline, rather than macro caution.

Qualitatively, this lands as a clean beat with constructive guidance: not an extreme raise, but clearly better than “just inline,” especially against a backdrop where investors had seen prior guide-related disappointments in the name.

3) Price reaction vs the pre-earnings call

The preview was built around a mid-$14 reference and an event-week straddle implying about a 13% move. The core stance:

Revenue and EPS likely to beat.
Guidance expected to be at least steady to slightly better.
Base-case reaction in the +6–10% zone, with a modestly bullish bias supported by a call-heavy options tape.

What actually happened:

Pre-earnings close (report day): about $14.88.
Next regular-session open: about $16.07 → +8.0% earnings gap vs the report-day close.
First post-earnings close: about $18.48 → +24.2% first-session gain vs the report-day close.

Versus the call:

Direction: The up-move call was correct.
Gap magnitude: The expected ~8% move essentially nailed the opening gap.
Full-session move: Realized performance far exceeded the base-case +6–10% range and even overshot the more aggressive bull-case range, reflecting powerful follow-through buying and positioning-driven squeeze dynamics.

In other words, the model framed the direction and initial gap well, but underweighted the intensity of the intraday squeeze.

4) How the thesis lined up with reality

What lined up

Beat on top and bottom line

The preview leaned into a beat on both revenue and non-GAAP EPS, grounded in UiPath’s pattern of exceeding guidance and nudging ranges higher. Actual results delivered exactly that: mid-teens percentage revenue growth and EPS above Street expectations, continuing a profitable-growth trajectory.
Upward gap on a call-heavy tape

The options snapshot going into the print showed:
- A heavily call-skewed book, especially in the front-week.
- Significant upside open interest around the mid-teens strikes.
- Elevated, but not one-sided, put activity.
That setup, combined with solid fundamentals, supported an upward gap as the central scenario. The actual +8% open validated that directional read.
Guidance tone above the “inline” bar

Pre-earnings, guidance was expected to be at least steady, with some chance of an upward tilt. Actual guidance came in with a midpoint slightly above consensus and confident commentary around AI and automation adoption. It didn’t blow away expectations, but it was clearly better than feared, especially given prior guide-induced volatility in the name.
Implied vs realized at the open

The preview argued that the short-dated implied move looked rich relative to a “good but not explosive” fundamental outcome, even as the call-heavy setup skewed risk to the upside. On a gap-only basis, that view held: realized gap (~8%) came in well below the ~13% implied move.

Where reality overshot

Squeeze intensity

The main miss was how far the move extended after the open. The bull scenario contemplated a +15–20% reaction if revenue topped $410 million, margins stepped up, ARR accelerated, and guidance was clearly upgraded. The stock ultimately delivered a mid-20s first-session gain, driven by a combination of:
- Strong fundamentals and guidance.
- Dealer hedging flows off crowded short-dated calls.
- Momentum and AI-thematic flows piling in after the initial gap.
Short-vol risk calibration

The preview treated front-week implied volatility as rich, making short-front/long-back structures appear attractive in a “contained upside” scenario. With the benefit of hindsight, the environment—call-heavy positioning plus a credible AI narrative—made the right-tail fatter than the implied move suggested, and that needed to be reflected more explicitly in how risky short-front vol really was.
Tail probabilities in similar setups

Although the preview acknowledged the possibility of a call-wall break and dealer chase, that scenario was treated more as a low-odds tail than a co-equal path. For a name with:
- Fresh, positive ARR and profitability narrative,
- A visible AI angle, and
- Crowded upside positioning,
the odds of a squeeze likely deserved more weight than they were given.

5) Trade framework outcomes

The original article highlighted three representative structures:

1. Short-dated bullish call spread (earnings week)

Idea: Buy near-the-money calls (e.g., 15) and sell higher-strike calls (e.g., 18) in the event-week expiry.

With the stock ripping from the mid-teens to near $18.50:

The lower leg finished deep in the money.
The short upper leg also finished in the money or very close to it.
The spread quickly moved toward max intrinsic value.

Result: This structure would have been a big winner, closely aligned with the model’s directional call and the realized magnitude of the move.

2. Bullish put spread below spot

Idea: Sell downside puts (e.g., 12.5) and buy lower-strike puts (e.g., 10) to monetize elevated downside vol while expressing a view that catastrophic breakdown was unlikely.

On a +24% earnings-session move:

The entire downside wing stayed comfortably out of the money.
Short puts collapsed in value as downside risk vanished.
Long protection decayed, but the net spread marked strongly in the trader’s favor.

Result: A solid, lower-drama winner—less explosive than the call vertical, but very effective for traders who just wanted to be paid for providing insurance into the event.

3. Calendar around the 15 strike

Idea: Sell short-dated 15 calls and buy later-dated 15 calls to bet on a modest uptick and vol crush at the front of the curve.

With the underlying blasting through 15 and holding in the high-teens:

The short event-week 15 call went deeply in the money.
The long-dated 15 call benefited from the higher spot and still-elevated vol, but the P&L timing skew hurt.
Unless aggressively managed or rolled, this position would have looked quite stressed in the immediate aftermath of the print.

Result: This was the main structure that worked against the realized tape. It highlights the risk of leaning too heavily on “rich front vol” arguments when upside squeeze risk is plainly visible in the positioning.

6) Crowd prediction

For this event, the voting module closed without any recorded votes—“No votes yet” at the cutoff time. With no majority up/down view, there was no crowd direction to score, which is why the correctness flag is effectively a placeholder rather than a meaningful signal.

In practice, this postmortem is purely model vs. tape, with no crowd sample to compare against.

7) Lessons for similar setups

Call-heavy + beat + constructive guidance is a dangerous mix for shorts

When short-dated calls dominate, fundamentals beat, and guidance comes in better than feared, a “just inline with implied” move is not the base case—it’s more prudent to expect either a muted reaction (if fundamentals disappoint) or a squeeze (if they don’t), with relatively little room in between.
Separate gap vs full-session expectations explicitly

The model’s expected move was almost perfect for the gap but too conservative for the full session. Going forward, it’s worth stating:
- A central case for the gap.
- A separate view on intraday follow-through, especially in squeeze-prone setups.
Short-front/long-back trades need stricter guardrails in squeeze regimes

Calendars and other short-front structures around key strikes should be:
- Sized more modestly.
- Placed further OTM when call-wall break risk is evident.
- Paired with clear action plans (rolls, caps, or hard exits) if the stock tears through the short strike.
Directional confidence vs. tail intensity

A medium (~0.6) directional confidence correctly captured that “up” was more likely than “down or flat” for the gap. What this event shows is that directional accuracy and magnitude calibration are distinct problems: the model can be right on direction with medium confidence while still underestimating how violently the tape can move when positioning, narrative, and numbers all line up.

In summary, the Q3 FY26 event for UiPath validated the directional call—beat, up, and a gap around the expected size—while reminding traders that in AI- and automation-linked names with crowded upside positioning, the real edge often lies in correctly sizing the squeeze tail, not just guessing the sign of the move.

Published: Dec 5, 2025, 8:19 AM

1) TL;DR / Headline Signal

UiPath reports fiscal Q3 2026 after the close on December 3 with Wall Street looking for roughly $393 million in revenue and about $0.15 of non-GAAP EPS. Expectations are not low, but the company comes in with a strong recent history of beating on both revenue and earnings and then nudging full-year guidance higher.

Using the full options chain snapshot at $14.61, the 12/5 weekly at-the-money straddle (14.5 strike) trades around $1.95, implying a move of roughly 13% in either direction. Short-dated implied volatility is much higher than recent realized volatility, while the rest of the curve is elevated but more moderate. Combined with a heavily call-skewed front week, the overall setup points to a likely beat, guidance that is at least steady to slightly better, and a base-case reaction in the +6–10% range—bullish, but smaller than what the weekly straddle is pricing.

2) Setup / What the Street Expects

Into this print, consensus revenue is just under $393 million, roughly 10–11% year-on-year growth, with non-GAAP EPS around $0.15. That sits on top of a prior quarter where UiPath delivered a clean beat on both lines and lifted full-year ranges for revenue, ARR, and operating income.

On the fundamental snapshot from the same timestamp as the options data, the stock trades at a bit over 4.2x sales, with trailing net margins just above 1% and revenue growth in the high single to low double digits. Gross margin is over 83%, and leverage is modest: debt-to-equity is only about 0.04, while current and quick ratios sit near 2.7x and 2.5x respectively. This is a software name that has already pivoted from “grow at all costs” to “profitable grower,” but it still carries a growth-style valuation.

Technically, the shares are up modestly over the last year, sitting about 22% below the 52-week high of 18.74 and roughly 56% above the 9.38 low. That reflects a recovery from earlier drawdowns without a full rerating, leaving room in both directions depending on how convincingly management can sell the AI and automation story.

3) Fundamentals & Recent Results

The most recent quarter (Q2 FY26) was solid across the board. Revenue landed at $362 million, up 14% year on year. ARR reached about $1.723 billion, growing 11%, with net new ARR in the low-30-million range. Non-GAAP gross margin was in the mid-80s and non-GAAP operating income was in the low-60-million range, implying a mid-teens operating margin.

Off that base, management raised full-year guidance: revenue to the mid-$1.57 billion range, ARR to the high-$1.83 billion area, and non-GAAP operating income to roughly $340 million. The company is now clearly in “grow and harvest” mode—driving respectable double-digit top-line growth while steadily expanding margins and generating positive cash flow.

The fundamentals embedded in the user’s snapshot line up with that picture: mid-single-digit EPS on a trailing basis, very high gross margins, positive but thin net margins, and revenue growth in the high single to low double digits. Beta just above 1 signals slightly elevated market sensitivity but not extreme, and average volume is healthy. The main question for this quarter is whether ARR and net new ARR can show enough acceleration, especially in AI-related use cases, to support that valuation while margins continue to improve.

4) Options & Tape Diagnostics

All of the options observations here come from the full chain provided, with the stock at $14.61 and the as-of timestamp of 2025-12-02T20:09:45Z.

Event-week implied move and term structure

For the 2025-12-05 expiry (three days to go):

Nearest-to-spot strike is 14.5.
14.5 call mid is about 1.04; 14.5 put mid is about 0.91.
The combined straddle is ~1.95, implying a move of roughly 13.3% (1.95 ÷ 14.61).

The price-history summary in the same payload shows 30-day realized volatility around 60% annualized and 90-day realized around 63%. Short-dated implied volatility is therefore running roughly three times realized, while 2–4 week expiries (12/12, 12/19, 12/26 and early January) show straddle-implied moves in the mid-teens over longer windows. That’s a classic earnings hump: a very large discrete event premium with somewhat elevated, but not extreme, follow-through expectations.

Positioning: calls vs puts, by expiry and strike

Across the entire chain, the totals are heavily skewed toward calls:

Call open interest: ~788k contracts vs ~188k puts.
Call volume on the day: ~33k vs ~6.5k puts.

For the 12/5 expiry alone:

Call OI is about 29.3k vs 10.1k puts.
Call volume is roughly 10.6k vs 2.5k puts.

By strike within that event week:

Largest call OI clusters sit at 14 (~6.9k contracts), 15 (~4.3k), 15.5 (~2.7k), 20 (~2.4k), and 14.5 (~2.3k).
Put OI is smaller and more dispersed, with the biggest pockets around 14, 13.5, 14.5, 12.5 and 13, each in the low-thousands.

Implied volatility is essentially symmetric between calls and puts at a given strike, so the skew is in positioning, not pricing. The tape says traders have crowded into short-dated upside exposure while downside hedging exists but isn’t dominant.

This all adds up to a call-heavy, moderately speculative earnings setup:

The front-week surface assumes a big move, but not a one-sided crash.
Call walls around 14–15 and a secondary cluster at 20 can act as magnets or accelerants if the stock gaps higher.
With event-week vol already very rich versus realized, traders who think the result will be “good but not explosive” have a strong argument for short-front/long-back structures.

5) Sentiment (Analysts, News, Social)

Analyst sentiment is cautious but not outright bearish. Aggregated ratings line up around a “Hold” consensus, with the average 12-month price target in the high-$13s to mid-$15s and a fairly tight range between low-$12 and high-$17. The target band is close to the current price, signalling respect for execution and the balance sheet but limited conviction in a major rerating without clearer signs of faster growth.

Recent coverage has emphasized the strong Q2 beat, the move to positive net income, and the guidance raise for FY26. At the same time, there is plenty of commentary noting competitive pressure in enterprise software and AI, as well as recent insider selling, which blunts enthusiasm. Technical write-ups highlight that UiPath’s relative strength rating has moved into the low-80s—often a prerequisite for leadership—but also that the shares are not in a clean breakout pattern and are best watched around the earnings event.

On the social side, path is quietly popular rather than a meme. There are bullish threads arguing that AI-driven automation and agentic workflows make UiPath a long-term winner, and some options-focused chatter around “cheap AI exposure” in the mid-teens, but the name hasn’t reached the kind of speculative fever pitch that would, on its own, be a reason to fade.

6) Guidance Scenarios

Base case (most likely)

Revenue in the $398–405 million range, a 1–3% beat versus consensus.
Non-GAAP EPS of $0.16–0.18 on stable gross margins and incremental operating leverage.
ARR growth in the 11–13% band with net new ARR slightly above recent trends.
Full-year guidance reiterated or nudged higher at the midpoint, with constructive but measured commentary on AI-driven automation and agentic workflows.

In this scenario, the stock likely gaps higher but not explosively. A move into the mid-teens, say +6–10%, would be consistent with the recent beat-and-raise pattern and the call-heavy tape, but it would still undershoot the 13% implied move, leaving short-premium traders and calendar structures in good shape.

Bull case

Revenue at $410 million or better, implying a 4–5%+ beat.
EPS of $0.20 or more, with a clear step-up in operating margin.
ARR and net new ARR accelerate (helped by AI-heavy deals), with strong commentary on pipeline and large enterprise wins.
Full-year guidance raised meaningfully again, and management leans into a more aggressive multi-year growth narrative for AI-driven automation.

Here, a +15–20% move is plausible. Call walls at 14–15 could give way quickly, and the higher-strike clusters (including 20) become relevant, potentially forcing dealers to chase delta and providing a short-term tailwind.

Bear case

Revenue slips into the $380–388 million range, missing consensus and probing the low end of prior expectations.
EPS lands in the $0.12–0.14 range, with margin pressure from spending or weaker mix.
ARR growth fades toward high single digits, and management turns cautious on IT budgets, deal timing, or competition.
Guidance is trimmed or left flat with a defensive tone.

In that outcome, the call-heavy positioning turns into an overhang. A 15–20% downside gap into the low-teens is very much on the table as speculative longs exit and dealers rebalance.

7) Trade Framework

This section is descriptive, not prescriptive. It outlines how some traders might choose to express views given the current setup.

Short-dated bullish call spread (earnings-week)

For traders leaning into the upside bias, a common approach is a defined-risk vertical in the event week, for example:

Buy 12/5 15 calls.
Sell 12/5 18 calls.

This structure benefits from a move into the high-teens that fits the base or bull case without requiring a multi-standard-deviation spike. The trade is sensitive to both direction and time decay; with vol this high, being wrong on direction is punished quickly.

Bullish put spread below spot

For those who see the balance sheet and margin profile as a floor:

Sell 12/5 12.5 puts.
Buy 12/5 10 puts.

This leans on the view that a catastrophic breakdown into single digits is unlikely unless guidance or ARR truly disappoints. Elevated front-week volatility means the credit per unit of downside cushion is relatively generous, but a guidance shock can still push the stock toward the short strike fast.

Calendar around the 15 strike

Given the steep earnings hump and sizable 15-strike call interest:

Sell 12/5 15 calls.
Buy 12/19 or 01/02 15 calls.

If the stock moves up modestly and then settles near the mid-teens after the print, short-dated vol should collapse while out-week vol stays supported by ongoing AI-automation headlines and residual positioning. A very large move through the strike can hurt, so sizing and strike selection matter.

8) Key Risks & What Would Change the View

The mild bullish bias here is predicated on continued beat-and-raise behavior, stable ARR growth, and no negative surprise on AI momentum.

The main risks:

Guidance proves underwhelming, or ARR weakens more than expected.
Macro or IT-budget commentary turns cautious, implying slower enterprise automation deals.
Competitive dynamics in AI and automation compress UiPath’s growth or pricing power.
The crowded short-dated call positioning unwinds violently, turning a modest gap into a larger reversal.

On the flip side, evidence of clear ARR acceleration, strong AI-related upsell, and another meaningful guidance hike would justify a more aggressive bullish stance and materially increase the odds that the realized move exceeds the rich event premium currently implied by the options market.